The euro slipped below $1.15, its weakest level since late March, as a strengthening US dollar gained further momentum. Traders responded to a more hawkish tone from the Federal Reserve, which left interest rates unchanged but signaled a shift in its outlook: in its latest projections, nine policymakers now expect at least one rate increase by the end of 2026. This came on the heels of recent rate hikes by the European Central Bank last week and the Bank of Japan earlier this week, with markets currently pricing in at least one more ECB increase before year-end.
Market sentiment was also influenced by reports of a US–Iran agreement to reopen the Strait of Hormuz, a key global oil transit route. The news pushed oil prices to three-month lows, easing inflation concerns. However, geopolitical risks remained in focus, as US President Donald Trump warned of potential renewed attacks and targeted measures against Iranian officials if the terms of the agreement were not honored.
